Sweeping changes to Fair Work Act for employers eligible for jobkeeper payment

Much of the media coverage about the Commonwealth’s jobkeeper payment scheme has followed the money; namely, the fact that the scheme will provide a payment of $1500 per fortnight to eligible employers to support the continued employment of their employees.  However, sometimes it’s not just about the money;  where an employer is eligible for the jobkeeper payment, there are a number of new provisions of the Fair Work Act which apply to those employers only, and which provide those employers with significantly increased flexibility in dealing with the business consequences of the current COVID-19 pandemic.

Which employers are affected?

The Fair Work Act changes apply to employers who qualify for the jobkeeper scheme.  To qualify for the jobkeeper scheme (putting aside certain exceptions such as Australian government agencies and companies in liquidation) an employer must have been carrying on business in Australia (or, if a non-profit entity, had been pursuing its objectives principally in Australia) as at 1 March 2020.  The employer must also satisfy the “decline in turnover test”.  The “decline in turnover test” is calculated on the basis of projected GST turnover for either a calendar month between April and September 2020, or the quarters commencing on 1 April 2020 or 1 July 2020 (depending on whether the organisation’s Business Activity Statement reporting period is monthly or quarterly).  The decline necessary (measured against the relevant month or quarter in 2019) for an employer to qualify for a jobkeeper payments is:

  • 15% if the employer is an ACNC registered charity (other than a university or a school);
  • 50% if the employer’s aggregated turnover for either the current year or the previous year exceeds $1 billion; and
  • 30% if the employer is not covered by one of the two categories listed above.

“Jobkeeper enabling directions”

Where an employer qualifies for the jobkeeper scheme, a new section of the Fair Work Act permits the employer to give a number of different kinds of “jobkeeper enabling directions” to their employees. Jobkeeper enabling directions allow the employer significantly more flexibility than is currently permitted under the Fair Work Act in a number of respects.

The most important of these is the ability of an employer to give a “jobkeeper enabling stand down direction”.  Before the new provisions, an employer could only stand down employees without pay if the employees could not be usefully employed because of a “stoppage of work”.  This did not  provide much assistance for employers in situations where, although the available work was significantly reduced, the business was still operating (albeit in a limited way) so that work had not “stopped”.

A “jobkeeper enabling stand down direction”, by contrast, can be given even if there has not been a “stoppage of work”; Rather, all that is required is that the employee cannot be usefully employed because of “changes to business” attributable either to the COVD-19 pandemic, or to government initiatives to slow the transmission of COVID-19.  Further, a “jobkeeper enabling stand down direction” can be given on a partial basis, so that an employer can “stand down” an employee on certain days of the week, or direct the employee to work shorter hours on the days that the employee does work.

Jobkeeper enabling directions can also be made:

  • To require an employee to perform different duties, as long as those duties are reasonably within the scope of the employer’s business operations, and are safe;
  • To require an employee to work from a different location, including their home, as long as that location is safe and does not require an employee to travel an unreasonable distance (where reasonableness includes taking into account the circumstances of the COVD-19 pandemic);
  • To request an employee to vary their usual days or hours of work (in circumstances where the new legislation creates a corresponding obligation on the employee not to unreasonably refuse this request); and
  • To request an employee to take annual leave on either full or half pay, provided that the request will not result in the employee having a balance of paid annual leave of less than two weeks (with, again, a corresponding obligation on the employee not to unreasonably refuse such a request).

Preconditions to, and limitations on, jobkeeper enabling directions

There are a number of requirements which affect the making of jobkeeper enabling directions, the most important of which are as follows:

  • A jobkeeper enabling direction does not apply if it is unreasonable in all of the circumstances;
  • A jobkeeper enabling direction does not apply unless the employer reasonably believes that the direction is necessary to continue the employment of one or more employees of the employer;
  • A jobkeeper enabling direction does not apply unless notice and consultation obligations are met.  As to notice, the employer must give three days’ written notice to an employee of the employer’s intention to make a jobkeeper enabling direction before that direction can be made (although the Act does allow for a shorter notice period if the employee “genuinely agrees” to a shorter notice period).  After notice has been given, the employer must consult with the employee about the proposed direction, and must keep a written record of that consultation;
  • A jobkeeper enabling direction must be in writing; and
  • The period in which an employee is working in accordance with a jobkeeper enabling direction counts as service for the purposes of the Fair Work Act (which affects entitlements such as a severance pay, and the right to bring unfair dismissal proceedings).

Finally, where an employee has been stood down in accordance with a “jobkeeper enabling stand down direction”, the employee is entitled to request (and the employer must not unreasonably refuse) that the employee be permitted to engage in “reasonable secondary employment” (that is, working for another employer who has useful work to offer), or in training, or in professional development.

Enforcement and dispute resolution

Disputes about jobkeeper enabling directions can be referred to the Fair Work Commission by either employees, employers, unions or employer organisations, and the Fair Work Commission can resolve such disputes by arbitration (although it would be expected in practice that the Fair Work Commission will seek to conciliate any disputes as the first step).

Employers need to ensure that they are complying with all of the requirements set out above, because an employer who gives a purported jobkeeper enabling direction which the employer knows, in fact, is not authorised by the new legislation will commit a civil penalty offence.  Equally, adverse action taken against an employee arising from the rights in the new legislation (for example, dismissing an employee because the employee reasonably refuses to agree to work at a different location) will give the employee rights under the general protections provisions of the Fair Work Act.


There is no doubt that the new provisions of the Fair Work Act provide a useful toolbox for employers whose business or operations have suffered a significant decline because of the COVD-19 pandemic.  However, before you reach into a toolbox, it is a very good idea to first identify the tools which are likely to have sharp edges.

There are a number of the provisions of this new legislation which are designed to prevent unscrupulous use of jobkeeper enabling directions, but which may also snare employers who are merely unwary.  With all of the difficulties arising from current business circumstances, the last thing you want is to be letting your employment compliance obligations go through to the (job)keeper.

For more on our employment law capabilities, contact Leonard Lozina or Angus Macinnis

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April 13
Employment Law